Is Jeju Korea's Answer to Silicon Valley?

Jeju is a popular tourism destination and is set to welcome 10 million visitors this year. But its local government is trying to diversify its economy and build a high-tech sector.

Seoul is the economic, political and cultural hub of South Korea. With only 0.6% of the country’s land area, the capital city holds 10.6 million people and generates 21% of the national GDP. It is home to the country’s biggest companies, including technology giants such as
Samsung Electronics,
LG Electronics and SK Group.

One such place is Jeju, a small island at the southern tip of the Korean peninsula that is an hour by plane from Seoul. Although Jeju is usually known for its booming tourism industry, its local government has invested heavily in a 271-acre, $381-million science park, aiming to build up its high-tech industry and create Korea’s Silicon Valley. (The science park is one of six major projects to develop Jeju into a regional hub for education, healthcare and research.) Since much of the work in today’s high-tech companies is no longer constrained by geography, Jeju encourages these companies to relocate there. It also provides tax cuts and subsidies for land purchase and plant investment - but only for companies that are registered in Jeju. Recognizing that a huge part of Silicon Valley’s success stems from its lifestyle and start-up culture, Jeju sells its open space and pristine scenery as conducive for promoting creativity and organic growth. It is no wonder that its science park sits atop a small hill with lush greeneries.

Jeju's biggest coup to date is Daum Communications, which runs the country's second most popular Internet portal. It found that its employees in Seoul often complained about long commute hours, high population density and expensive rents. It also felt that the environment in Jeju would provide better work-life balance. Last April it opened its new company headquarters in Jeju, named “Daum Space,” a sprawling campus with high ceilings, green spaces and plenty of natural light. In an internal survey, Daum found that 80% of its employees were satisfied with their Jeju relocation. Its executives also credited the creative working environment in Jeju for improving its employees’ productivity. Another Jeju fan is Kim Jung-Ju, the founder of online gaming giant Nexon. He moved his corporate headquarters to Jeju in late 2011 and opened South Korea’s first computer museum on the island last month.

Jeju’s ambitious plan is not without its challenges. While Silicon Valley benefits from its access to a large pool of talent in the San Francisco Bay Area, Jeju National University is the only major university that is close to the science park. Even Daum admits that with a population of only half a million, Jeju is a difficult place for recruiting. (Less than half of its Seoul employees are willing to relocate to Jeju.) Many of the island’s local talents also prefer to move to Seoul. Moreover, the Jeju dialect is almost indecipherable to speakers of standard Korean. A vibrant venture capital community is vital to the growth of start-ups. According to the Korea Venture Investment Corporation, the proportion of the country’s venture capital that goes to Seoul-based start-ups has been increasing every year, from 64.2% in 2009 to 72.4% in 2012. What about Jeju? It received a paltry 1.6% last year.

To bolster its own high-tech sector, the Seoul government started building the billion-dollar, 137-acre Digital Media City in 2002, which lies between the city center and Incheon International Airport and has already attracted 350 technology companies.

Daum Communications' new headquarters currently occupy the largest plot within Jeju Science Park and is expected to expand outwards in the future. (Image credit: Yong-Kwan Kim)